Origin Energy Resources Limited v Benaris International NV (No 2)
[2002] TASSC 104
•22 November 2002
[2002] TASSC 104
CITATION:Origin Energy Resources Limited v Benaris International NV & Anor (No 2) [2002] TASSC 104
PARTIES: ORIGIN ENERGY RESOURCES LIMITED
v
BENARIS INTERNATIONAL NV
WOODSIDE ENERGY LIMITED
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 1144/2001
DELIVERED ON: 22 November 2002
DELIVERED AT: Hobart
HEARING DATES: 28, 29 October 2002
JUDGMENT OF: Slicer J
CATCHWORDS:
Arbitration - The submission and reference - Submission as a defence and as a ground for stay of proceedings - Whether dispute is a "matter agreed to be referred to arbitration" - Whether dispute is a matter capable of arbitration - Second defendant not a party to arbitration.
International Arbitration Act1974 (Cth), s7(2).
International Commercial Arbitration Convention.
UNCITRAL Model Law
Resort Condominiums International Inc v Bolwell & Anor (1993) 118 ALR 655; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) & Anor (1998) 90 FCR 1; Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCA 420; White Industries v Trammel (1983) 51 ALR 779; Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd (1979) 25 ALR 605, followed.
Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, applied.
Bakri Navigation Company Limited v Ship "Golden Glory" Glorious Shipping SA (Owners of), Federal Court of Australia, unreported 306/1991; Elders CED Ltd v Dravo Corporation (1984) 59 ALR 206; Mitchell Cotts Freight (Australia) Pty Ltd v Through Transit Mutual Insurance Association Ltd (1989) 98 FLR 99, considered.
IBM Australia Ltd v National Distribution Services (1991) 22 NSWLR 466; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 2 WLR 262; Northern Regional Health Authority v Derek Couch Construction Co Ltd [1984] QC 614, referred to.
Aust Dig Arbitration [37]
REPRESENTATION:
Counsel:
Plaintiff/Respondent: W Harris
First Defendant/Applicant: J D Merralls QC and G L Sealy
Second Defendant/Respondent: P W Tree
Solicitors:
Plaintiff/Respondent: Dobson Mitchell & Allport as agents for Johnson Winter & Slattery
First Defendant/Applicant: Piggott Wood & Baker
Second Defendant/Respondent: Page Seager
Judgment Number: [2002] TASSC 104
Number of Paragraphs: 58
Serial No 104/2002
File No 1144/2001
ORIGIN ENERGY RESOURCES LIMITED v BENARIS INTERNATIONAL NV
and WOODSIDE ENERGY LIMITED(NO 2)
REASONS FOR JUDGMENT SLICER J
22 November 2002
The issues giving rise to these reasons for judgment have been stated in Origin Energy Resources Limited v Benaris International NV & Anor; Woodside Energy Limited v Benaris International NV & Anor [2002] TASSC 50 in which proceedings comprised in action 1144/2001 were stayed and matters capable of resolution referred to arbitration as required by the International Arbitration Act 1974 (Cth) ("the Act"), s7. The pleadings contained varying claims for remedy and the judgment did not identify the precise matters to be referred. The reasons for judgment concluded, at par54:
"The Origin proceedings ought be stayed, at least in part. The matter, or matters, capable of resolution by way of arbitration ought be referred for arbitration. Some of the matters pleaded by Origin do not come within the ambit of an arbitration matter and it might be necessary to specifically identify those matters to be referred (see the Act, s7(2)(b) 'so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter'). It might also be necessary to impose conditions which ensure that the prejudicial effects of stay are not compounded by delay on the part of Benaris in the reference to arbitration. The parties are invited to consider the practical effects of this determination and seek any necessary consequential or supplementary orders."
Origin and Benaris have been unable to agree either on the terms of arbitration or the necessity or form of any consequential orders.
The determination of consequential orders has been made more complex by other issues, both procedural and substantive. There is a separate, but concurrent, action (167/2002) concerning the same parties and similar issues, which was also the subject of the earlier hearing. Following the publication of the reasons for decision on 14 August 2002, Woodside, on 13 September, applied for summary judgment against both Origin and Benaris in those separate proceedings and sought liberty "to pursue the balance of its claim for relief".
Both the matters concerning consequential orders in this action and summary judgment were listed, at the convenience of counsel, on 28 October 2002, the former for hearing and the latter for mention only. On that day, Origin, without appropriate notice to the Court or the other parties, sought to argue that the application for summary judgment be first determined and that the referral to arbitration made in general terms in judgment [2002] TASSC 50, be stayed until the resolution of all matters comprised in the action brought by Woodside, as a condition permitted by the Act, s7(2)(b). In doing so it doubtless sought to use any findings and orders in the Woodside action as a bar to any contrary determinations in the arbitration proceedings. Its failure to give adequate notice and its mistaken and careless assumption concerning the timing of the summary judgment application caused prejudice to the other parties, especially Woodside, which sought to place further evidence before the Court, and created a dilemma for this Court.
The Court has resolved to partially resolve the dilemma on its own initiative. Failure to do so might involve a further delay in the determination of the matter or matters to be referred to arbitration until well into the year 2003. The Court will resolve the initial issue of contention in the absence of a determination of the application for summary judgment, but refrain from making formal orders. The parties will at least be aware of the basis of the issue of matters to be referred and in the absence of summary judgment be better able to advance their respective cases. If summary judgment is granted, then its impact can be determined as a discrete issue.
A further complication is caused by the nature of the proceedings. Benaris purported to terminate the principal agreement (the Farmin Agreement) which caused Origin to commence its proceedings by way of writ and delivery of a statement of claim. By necessity, its pleadings included matters often raised by a defendant. Benaris sought recourse to the provisions of the Act before the delivery of its defence and the issue of referral was determined before the closure of the pleadings. Thus, not all of the issues have necessarily been identified. That in turn is compounded by the existence of the concurrent action, 167/2002, with similar, but not necessarily, identical issues, and the prospect of claims of res judicata or issue estoppel. Origin and Woodside have a commonality of interest, at least in relation to the issue of termination of the Farmin Agreement and have adopted similar positions in relation to this hearing.
The areas of dispute were stated in an exchange of letters between Origin and Benaris on 6 and 15 August 2001 respectively. In its letter dated 6 August, Origin advised:
"However, we do not agree that Origin should meet Benaris' share of the cost of a potential production test in Thylacine 1, should the Joint Venture elect to re-enter this well for such purpose, for the following reasons:
1 Clause 4.1.2 of the Farmin Agreement provides for the drilling and testing or abandoning of the Commitment Well and a decision was made to test, not abandon. We believe that Origin (and Woodside) met its testing obligations in full through the conduct and funding of an exhaustive MDT pressure and sampling program at significant cost, that underpinned the decision by the Joint Venture, (including Benaris), to case and suspend this well for later completion as a producer.
The decision to test by wireline was a deliberate one based on both technical and cost considerations.
2 The intent of the Farmin Agreement was that the obligation under Clause 4.1.2 would be fulfilled on conclusion of all operations relating to the drilling and evaluation necessary to determine that the well was a discovery and potentially capable of commercial production. It was not envisaged or intended that future appraisal activities conducted as part of a completely separate operation would be included. We consider that all such separate operations are outside the scope of the Agreement.
3 Benaris' position can be interpreted to imply that Origin will not have fulfilled its farmin obligations to Benaris unless and until a production test is carried out on Thylacine 1 or the well is abandoned, neither of which may occur under the Joint Venture's current forward plans. If this is in fact Benaris' position, we would have expected comments to that effect from Benaris at the time that decisions were being made in relation to suspension of the well? We consider it unreasonable for Benaris to subsequently advise that it does not regard the operations conducted on Thylacine 1 as fulfilling the earning obligation.
Note also that in the event that Thylacine 1 is abandoned, Benaris' costs of any such operation are protected by Clause 5.3 of the Farmin Agreement.
4 Selective testing in Thylacine 1, if it occurs, would be undertaken with the benefit of knowledge acquired in the appraisal well Thylacine 2, and for that matter, knowledge acquired in Georgraphe 1 and potentially Geographe North 1 in adjacent permit VIC/P43.
Given that in all probability both fields will be developed in combination, production testing is proposed to optimise such a combined development through selective testing of zones in those wells where there may still remain some doubt as to the magnitude of their contribution to future production.
A corollary of this is that, for example, had we production tested intervals in Thylacine 1 at the time of drilling, we may well have acquired superfluous data at great cost, if such information could have been acquired more cost effectively in subsequent wells, be it Thylacine 2, Geographe 1 or Geographe North 1.
5 We would also argue on the basis of reasonableness, that Origin (and Woodside) has fully met its farmin obligations to Benaris through the funding of 3D seismic, not 2D seismic across the Thylacine structure, and the drilling, MDT testing, and casing of Thylacine 1 at a combined cost significantly greater than anticipated at the time our farmin negotiations were concluded."
Benaris in its reply defined its approach in the following terms:
"We agree in essence with your statement in paragraph 2 of your letter that 'the intent of the Farm‑in Agreement was that the obligation under Clause 4.1.2 would be fulfilled on conclusion of all operations relating to the drilling and evaluation necessary to determine that the well was a discovery and potentially capable of commercial production'. We also reiterate our position as set out in our letter dated 31 July 2001, namely that this intent as clearly expressed in Clause 4.1.2 means that the farm‑in obligations of Origin continue in respect of the Commitment Well (as defined in the Farm‑in Agreement) until all testing and evaluation necessary prior to commencement of production is completed.
This intent has always been maintained throughout discussions by the parties in respect of Thylacine‑1 and should be examined in the light thereof:
(a)During initial pre‑drill discussions, Origin and Benaris both supported testing of Thylacine‑1 in a success case. Woodside presented a case for not needing to test Thylacine wells at pre-drill TCM's but Benaris have continued to express their view that the Thylacine‑1 well should be tested to improve technical understanding, demonstrate deliverability and book reserves.
(b)After the drilling of Thylacine‑1, Origin (and Woodside) recommended that Thylacine‑1 be suspended, on the basis that no further testing of wells was necessary ie that Thylacine‑1, which Origin expected to be a commercial discovery, and any subsequent wells showing similar results, (and indeed the field), could be brought into production without any further testing. It was on the premise of such recommendation that Benaris agreed to the proposed suspension of Thylacine‑1.
However, for reasons which are not entirely clear to us, Origin and Woodside have changed their minds in respect of any further testing of Thylacine‑1. It is now proposed that testing is needed on Thylacine‑2 and that Thylacine‑1 may have to be re‑entered for testing if the Thylacine‑2 well is not suitable.
This clearly shows that Origin is of the view that not all‑necessary evaluation in respect of Thylacine‑1 has been carried out. This is further demonstrated by Origin's confirmation at the Operating Committee Meeting on 2 August 2001 that a discovery has not been notified to the Joint Authority under the applicable legislation and that there is no immediate intention to do so.
As such, Benaris did not make any comment on the testing issue at the time the suspension decision was taken because at that time it was not contemplated by the parties that there would be further testing. Now you are adopting the rather incongruous position of saying that you believe further testing is required, but at the same time asking Benaris to acknowledge that Origin has performed all necessary testing in respect of Thylacine‑1 and hence completed its earn‑in obligations as set out under Clause 4.1.2 of the Farm‑in Agreement!
The inescapable conclusion drawn from the above is that the earn-in requirements of Clause 4.1.2 of the Farm‑in Agreement have not been met.
Apart from the strict legal terms, you have also argued that it would be reasonable for Benaris to acknowledge that Origin (and Woodside, although we do not know what the Woodside obligations are,) should be considered as having met its obligations because of the expenditure incurred to date. Although we acknowledge that Origin has undertaken 3D seismic, not 2D, and that wire‑line testing has been carried out towards earning a significant equity, it is important to note that, consistent with the intent of the parties in respect of the earn-in by Origin, no maximum expenditure figure was nominated in the Farm‑in Agreements. Again, the intent, confirmed in the quote from your letter, was that Origin would do whatever was necessary to determine if there had been a discovery, with the next step being commencement of commercial production.
One of the consequences of Origin/Woodside changing their minds now about testing is that there would be an additional expenditure of $2.8 million approx to re‑enter and test Thylacine‑1, as opposed to testing Thylacine‑2. We can understand that Origin do not want to incur this additional expense. However, the question is ‑ is it reasonable to ask Benaris to compromise its rights and agree to savings for Origin/Woodside of $2.8 million, at a cost to Benaris of $1.756 million (20% x $8.78 million)?
We have given this issue careful consideration and while we wish to make every endeavour to maintain good relations with Origin, both for this and future ventures, there does not seem to be any compelling reason for Benaris to voluntarily accept a penalty of $1.756 million.
In conclusion, Benaris maintains that Origin has not fulfilled its earn‑in obligations under the Farm‑in Agreement. As such, our specific positions concerning testing are as follows:
·Any further testing of Thylacine‑1 is at the expense of Origin in accordance with Clause 4.1.2 of the Farm‑in Agreement.
·If Thylacine‑2 can be tested without re‑entering Thylacine‑1, then in consideration of Benaris accepting testing of Thylacine‑2 in lieu of Thylacine‑1, Benaris proposes that the share of Benaris in the testing costs should be borne by Origin towards satisfaction of Origin's earn‑in obligations under the Farm‑in Agreement (and in the process saving Origin/Woodside $2.8 million)."
Some, but not all, of these matters can be identified in the pleadings of Origin and, taken together, the matters in dispute can be formulated as:
(1)whether Origin had performed its contractual obligations in accordance with the Farmin Agreement (in particular cl 4.1.2) and if not, whether non-performance constituted a breach of contract;
(2)whether the time for the performance of certain obligations by Origin had elapsed, or if not, its conduct amounted to an anticipatory breach giving rise to remedy;
(3)whether notice of termination dated 11 December was a valid notice of breach for the purposes of the Farmin Agreement, cl 7A;
(4)whether the unconscionable conduct of Benaris entitled Origin to relief from any remedy sought by Benaris under its contractual rights afforded by the Farmin Agreement (in particular, cls 2.5 and 7A) or constitute a penalty such as to render them unenforceable.
Two matters can be identified as disputation which are not clearly raised in the pleadings, namely whether Origin has remedied any breach within a particular time and whether any obligations have not been fully performed by Origin. Those issues can be identified by reference to the exchange of correspondence, implied in the existing pleadings or might become apparent in any defence or reply delivered by the parties. Benaris contends that issues referable to arbitration are not necessarily confined by the pleadings but may be expanded by reference to the interests of others not party to the arbitration clause.
Three of the issues identified and the questions of remedy of breach and part performance are clearly contractual in nature and capable of resolution by arbitration. Two of the issues, namely unconscionable conduct and relief from the consequence of forfeiture, are equitable in nature. The question of the nature of a penalty comes within both categories.
Benaris contends that all matters identified are referable to arbitration. Origin, subject to its arguments concerning stay and summary judgment, concedes that the matters raised in its statement of claim, pars1 - 18 (propositions 1 - 3 (supra)) are capable of reference, but that the equitable pleas ought not remain matters for arbitration.
The contention of Benaris is initially attractive. The one tribunal ought determine all of the matters in contention but for specific and confined matters, (Government Insurance Office of NSW v Atkinson Leighton Joint Venture (1981) 146 CLR 206, Stephen J at 235). Any error of law by the arbitration tribunal, especially in the application of equitable principles, might be susceptible to limited review by this Court, but findings of fact might not be subject to the appellate process. The central disputation, concerning the ambit of clauses of exploration, results, date and the extent of necessary testing, could best be determined by a specialist tribunal. Ordinarily reference of the whole dispute could readily be made within the terms of the agreement. To that extent, issues such as "variation by agreement or conduct", "international practice", "appropriate data", "penalty or compensation", and the like, ought remain the province of the arbitration process. A specialist tribunal might be able to determine competing equities provided that all the parties are before it. It might not be able to do so in the case of an absent party.
However, as Mustill and Boyd, Commercial Arbitration, Butterworths 1982, observed, at 111:
"One of the weakest features of English arbitral procedure is its inability to deal with third party situations."
In this case both Origin and Benaris effectively have separate claims involving Woodside. Benaris claims the return of the portion of the licence held by Woodside through Origin. Origin and Woodside have a commonality of interest in that issue, yet Woodside is the second defendant. The Assumption Agreement involved the three parties, yet only two are parties to the arbitration clause which is the subject of these proceedings. There are two sets of proceedings; an arbitration and an action in this Court. Questions of inconsistency of outcome, applicability of findings of fact, merger of judgment and res judicata are possible issues. (See generally Mustill and Boyd (supra) at 105, 109 - 112.)
Referral of "all of the issues" as between Origin and Benaris will not resolve those problems. The making of an award is often equivalent to a judgment (Brali v Hyundai Corporation (1988) 84 ALR 176) and is said to be one which finally determines the rights of the parties (Resort Condominiums International Inc v Bolwell & Anor (1993) 118 ALR 655). An award might bind Origin but, arguably, not Woodside. Dealings between Woodside and Benaris might afford Origin a basis for claiming estoppel or variation of contract. Acquiescence by Benaris through the Assumption Agreement might preclude a finding that Benaris had validly terminated the contract or was entitled to the return of all of the claimed interest in the licence. Given that the reference to arbitration has been made before the closing of the pleadings, it is impossible for the Court to identify all of the issues, or their permutations, which might be raised by the parties. Benaris is seeking the reference of all of the matters identified in the statement of claim but resolution of these matters will, in all probability, require consideration of other issues not yet raised. The manner of the pleadings is an important consideration, but is not determinative (Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCA 420 at 426).
The arbitration clause, which survives purported termination (Resort Condominiums v Bolwell (supra)), does not, by its own existence, enlarge the nature of the matters to be referred. The terms "dispute", "controversy" and the like, remain confined to the contract and create no grant of additional jurisdiction to the arbitrator. An award might merge jurisdiction with judgment, but does not necessarily govern it unless "all matters capable of resolution" are determined by the arbitral award.
In Australia, unlike the United Kingdom (Harbour Assurance Co (UK) v Kansa General International Insurance (1993) 1 Lloyds Rep 455), there is no presumption that "one stop" adjudication is a necessary outcome (Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) & Anor (1998) 90 FCR 1; cf IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466). See generally Contemporary Developments in the Law of International Arbitration in Australia and New Zealand, Peter E King, (1999) 18 Australian Bar Review 254.
In White Industries Ltd v Trammel and Ors (1983) 51 ALR 779, Lockhart J did not refer to arbitration a matter described in the statement of claim of the action as:
"The third respondent in its capacity as Superintendent failed and neglected to act in a reasonable and equitable manner in determining and valuing CI and granting an extension of time thereon and was accordingly in breach of cl 23 of the said agreement."
since:
"There would still be a dispute or difference arising out of the contract, namely, a dispute or difference between the applicant as builder and the third respondent as Superintendent in relation to the third respondent's alleged failure and neglect to act in a reasonable and equitable manner in determining and valuing the relevant claims and granting extensions of time."
In Bakri Navigation Company Limited v Ship "Golden Glory" Glorious Shipping SA (Owners of), Federal Court of Australia, unreported 242/1991, Gummow J, exercising Admiralty jurisdiction, was required to deal with a claim of beneficial or equitable interest in a ship subject to arrest. His resolution of the initial problem has been described by Dr Wiswall, Procter and Associate in Admiralty, in his 1994 Ebsworth & Ebsworth Maritime Law Lecture in International Law, in the following terms at 7 - 8:
"The second Australian development is the case of The 'Golden Glory', which is noted because it 'sets the stage' for a yet more significant case. The issue before the Admiralty Court was whether an action in rem lies to compel specific performance of a contract for the sale of a ship, the ship in question having been arrested within the geographical jurisdiction of the Court and the owners having moved for release. An action for specific performance is in its nature a suit in equity in personam and is not the same as the possessory or petitory suit in admiralty to which I have earlier refereed, though if successful the practical effect of the outcome would be impossible to distinguish. Without discussing the equitable powers of the Admiralty Court or the source thereof, the Court held for the probability of jurisdiction and instead of issuing a decree for specific performance made the Solomonic decision to release the vessel from arrest conditional upon an undertaking by the defendant to execute and deliver a deed of sale in approved from. To coin a phrase, this was a 'neat' way to confirm that the equitable jurisdiction of the Admiralty Court may be exercised in actions in rem."
Solomon was recalled in response to an application for stay and referral to arbitration in accordance with the Act, s7. One of the matters raised in the continued hearing was whether the arbitration award was "inoperative or incapable of being performed" as prescribed by the Act, s7(5). The plaintiff had:
"… disavowed any further argument which would assert that the claim to specific performance was not a matter the determination of which was 'capable of settlement by arbitration' within the meaning of sub-s 7 (2) of the Act because such a claim was susceptible of determination exclusively by the exercise of judicial power; cf Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 351 - 352, per Deane, Gaudron JJ." (Bakri Navigation Company Limited v Ship "Golden Glory" Glorious Shipping SA (Owners of), Federal Court of Australia, unreported 306/1991, Gummow J.)
His Honour was required to determine four preliminary questions, namely:
"(1)Is there a concluded agreement between Bakri Navigation Co Limited and glorious Shipping SA for the sale of the ship 'Golden Glory' upon the terms alleged by Bakri Navigation Co Limited?
(2)If 'yes' to (1), does this proceeding involve the determination of a matter which, in pursuance of that agreement, is capable of settlement by arbitration, within the meaning of s 7 of the International Arbitration Act 1974 ('the Act')?
(3)Should the proceeding, as to whole or part, and, if so, as to which part, be stayed by order under sub-s 7 (2) of the Act, and the parties referred to arbitration?
(4)Is the Court required by sub-s 7 (2) not to make an order it otherwise would make under sub-s 7(2) of the Act?"
In his reasons for judgment (Bakri Navigation Company Limited v Ship "Golden Glory" Glorious Shipping SA (Owners of) Federal Court of Australia, unreported 306/1991, Gummow J concluded that the answer to questions 1, 2 and 4 was "yes" and to question 3, "no". He did so because although the matter was capable of resolution by arbitration despite the terms of a Deed of Undertaking said to have varied the terms of the agreement. He accepted a submission that the existence of an arbitration agreement:
"… for the purposes of the Arbitration Act, [was] … to be answered by looking at the state of affairs as it exists when the application for a stay is made."
He concluded that the effect of the Deed of Undertaking did not deprive the arbitration agreement of "all effect in the circumstances" but rendered it:
"… inoperative or ineffective in respect of the claims involved in the present proceeding …".
The reasoning, applicable here, is not that some of the matters raised are not referable, but that events subsequent to the Farmin Agreement or the conduct and exchanges before and after the Notice of Termination, are relevant to the resolution of the competing claims of the respective parties and that, if such be the case, whether they are all "capable of resolution by arbitration?"
The requirement, in a case such as this, to determine the ultimate issue, makes it necessary to define the powers afforded to the arbitral tribunal or the extent of adjudication afforded by the reference (Beaufort Developments (NL) Ltd v Gilbert-Ash (NL) Ltd [1999] 1 AC 266).
Mustill and Boyd ((supra) at 117), express the opinion that:
"English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not."
In order to determine the terms of reference, it is necessary to return to the terms of the Act, s7.
Legislative scheme
The legislation provides for:
(1)referral and procedural matters associated with existing proceedings and the preservation of rights (s7);
(2)recognition and enforcement of foreign awards (ss8, 9);
(3)administrative and evidentiary matters (ss10, 10A, 12, 14, 28);
(4)adoption of a model law (ss15 - 17) designation of judicial process (s18), and the extent of jurisdiction (ss20 - 22);
(5)powers and procedures of arbitral tribunals (ss23 - 27, 29);
(6)settlement of Investment Disputes, PtIV.
The Model Law "has the force of law in Australia" (s16) and powers of recognition and enforcement of an award are granted to this Court (s18) although there are some restrictions concerning public policy (s19), inconsistency (s20), and variation by agreement (ss21, 22).
Applicable provisions
The Act, s7(2) applies to:
"(a)proceedings instituted by a party to an arbitration agreement … against another party to the agreement." [Emphasis added.]
and
"(b)the proceedings involve the determination of a matter that, in pursuance of the agreement is capable of settlement by arbitration …". [Emphasis added.]
Under the terms of the Farmin Agreement, Benaris transferred to Origin an 80 per cent undivided interest in a resource permit and subsequently the parties entered into a Joint Operating Agreement providing for the exploration of gas and petroleum, with Origin as the operator. In 2000, Origin transferred to Woodside a 50 per cent undivided interest in the permit, reducing its own interest to 30 per cent. Following disputation as to the extent of rights and obligations created by the Farmin Agreement, Benaris purported, by notice, to terminate the agreement and required Origin:
"A… to remedy the breach."
and
"B… If Origin does not remedy the said breach within two (2) weeks of this notice from Benaris then Benaris shall be entitled to forthwith terminate this Agreement whereupon the provisions of Clause 2.5 shall apply."
Clause 2.5 provides:
"2.5 If this Agreement is terminated pursuant to clauses 2.4 or 7A, Origin shall forthwith and at its sole cost and expense, execute all documents and do all things necessary or as may be required by Benaris to re-assign or re-transfer the Assigned Interest, free and clear of all liens, encumbrances, rights and interest, to Benaris or any other person nominated by Benaris. In addition, Origin shall forthwith deliver to Benaris all materials, data, reports, studies and other information, including geological data and well lot trades, acquired from any and all sources and/or prepared in connection with the Seismic Program and shall transfer to Benaris all its rights under all contracts relating to the Seismic Program to the extent that those contracts are transferable. Origin must use its best endeavours to ensure that each contract relating to the Seismic Program contains a clause permitting the assignment of that contract to Benaris pursuant to this clause.
The Parties agree that if this Agreement is terminated pursuant to clause 2.4 as a result of the non-satisfaction of the condition set out in clause 2.1.2 or the condition set out in clause 2.1.3, Origin shall be entitled to a refund of the back costs paid in accordance with clause 2.1.1, free of interest. Save as expressly provided herein, Benaris shall not be required or obliged to pay to Origin any other moneys in connection with the re-assignment or the re-transfer of the Assigned Interest pursuant to the provisions of this Agreement."
A matter referred for arbitration would be the operation of cl 2.5. Central to these proceedings is the contention that Benaris is entitled to the re-assignment of the 80 per cent interest presently held by Origin and Woodside. Benaris has not sought in these proceedings, as yet, any order for re-assignment by Woodside, nor commenced separate proceedings.
Model Law
The terms of the International Commercial Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards is set out in the Act, Sch1, and the UNCITRAL Model Law in Sch2. It forms part of the law of Tasmania (the Act, s16). The Model Law, Article 8, requires:
"(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed."
and provides:
"(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court."
The terms of Article 8 differ from the Act, s7. Parliament has defined the reference of "a matter … capable of resolution", rather than a referral of parties "in a matter which is the subject of an arbitration agreement". The distinction restricts the import of Article 8 (Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 2 WLR 262, Lord Mustill at 278 - 279, see Critique in Commentary by Reymond, (1993) 109 LQR 337).
Article 16, par1, allows an arbitral tribunal to rule on its own jurisdiction and the validity of the agreement, and for those purposes:
"… an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract."
The terms of the arbitration clause (Farmin Agreement, cl 19) of dispute, controversy or claim, permit the Singapore International Arbitration Centre wide jurisdictional power, although it might be required to give consideration to the terms of the Farmin Agreement, cl 14, which provides:
"14.1All remedies, rights, undertakings, obligations or agreements of the Parties under this Agreement arising by law in respect of this Agreement shall be cumulative and none thereof shall be in limitation of any other rights, remedies, undertakings, obligations or agreements of the Parties provided that neither Party shall be liable to the other for any indirect or consequential damages arising from any breach of this Agreement.
14.2Each of the Parties may follow any such remedy to which it is entitled by law or otherwise, either concurrently or successively at its option."
It would be within the power (subject to cl 14) of the arbitral tribunal to order Origin to re-assign the original 80 per cent interest in the licence in accordance with the Farmin Agreement, cl 2.5, or determine that Benaris is entitled to itself execute the re-assignment by virtue of a power of attorney provided for in the Farmin Agreement, cl 2A.
The Model Law, ChVII, limits the basis on which an award can be set aside, providing.
"(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.
(2) An arbitral award may only be set aside by the court specified in article 6 only if:
(a) the party making the application furnishes proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or
(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or
(b) the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
(ii) the award is in conflict with the public policy of this State.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.
(4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside."
The award might be susceptible to challenge on the basis that Woodside's claimed interest in the licence was not, for reasons outside the issues arbitrated, susceptible to re-assignment and was beyond the power of either Origin or Benaris to give effect to the Farmin Agreement by virtue of cls 2.5 and 2A. But a more likely outcome would be that the award might not be susceptible to review. Certainly Woodside would not have standing to challenge the determination independently of these proceedings. The term "not capable of settlement by arbitration" as used in Model Law, Article 34(b)(i), might require this Court to visit the whole matter afresh so that declarations or orders can be made requiring the re-assignment by Woodside. An award made in relation to the material rights and obligations of Origin and Benaris must, by virtue of Article 35(1):
"… be recognized as binding and, upon application in writing to this Court, shall be enforced".
Recognition or enforcement of the award may only be refused for reasons stated in Article 36, namely:
"(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or
(b) if the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
(ii) the recognition or enforcement of the award would be contrary to the public policy of this State."
Two consequences might follow from the terms of Articles 35 and 36.
The first is that an award determining forfeiture or re-assignment of the 80 per cent interest would be binding in these proceedings and give rise to the claim of issue estoppel or res judicata within the action commenced by Origin. Such an order binding as against Woodside might be "a breach of natural justice in connection with the making of the award" as predicated by the Act, s19(6).
The second is that the wording of Article 36(iii) recognises the separation of matters from "that part of the award which contain decisions which may be recognised and enforced". Any equitable remedy possessed by Woodside by virtue of either the Assumption Agreement, conduct or estoppel (on which Origin could also rely) might operate to prevent re-assignment or forfeiture.
The above analysis has been conducted in an attempt to interpret the meaning of "matter … capable of settlement by arbitration" appearing in the Act, s7(2). Benaris contends that all matters in dispute must be referred and, presumably, that the award would constitute a final order. Origin contends that the ultimate issue, namely forfeiture and re-assignment, is not, by reason of Woodside's equitable interest, capable of resolution by arbitration. Consideration of the provisions of the Model Laws supports Origin's contention.
The orders sought by Origin include an injunction restraining Benaris from:
"A(2)exercising its powers under the Power of Attorney in order to effect a transfer from Origin of any of the 80% undivided interest on the Permit originally transferred to Origin pursuant to the Farm-In Agreement"
and a declaration that:
"B(2)… Origin is entitled to be relieved against forfeiture of its interest in the Permit."
They are not matters capable of resolution by arbitration. There is some commonality of interest between Origin and Woodside and Origin might obtain the above orders by reason of Woodside's equitable claim raised in these proceedings. Woodside has an interest in the issue of whether Benaris' entitlement under the Farmin Agreement, cls 2.5 and 7A, constitutes a penalty, since that determination would impact on its own interest. It would either be bound, through res judicata or issue estoppel, by the award of the arbitral tribunal (Dobbs v National Bank (1935) 53 CLR 643) in which it had no right to argue its case and be denied natural justice (the Act, s19(1)(b)) or be permitted to re-argue the issue upon the continuation of these proceedings. In the latter instance, there would be no "settlement" of the matter by arbitration. A further matter, not capable of resolution by arbitration, is whether the effect of the Assumption Agreement was to reduce the share of the 80 per cent interest said by Benaris to be held by Origin.
The fact that all matters in dispute are not the subject of the Act, s7(2) (or its equivalent) was recognised in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) & Anor (supra), a case involving contractual and non-contractual claims against two other parties. In his judgment (with whom the other members of the court agreed), Emmett J said:
"Referring the parties to arbitration in respect of Contractual Claims against WBC, while the balance of the proceedings against WBC and the whole of the proceedings against KMC continue in this Court, would have the unfortunate result that Hi-Fert and WBC would be litigating similar issues in different tribunals. The result is unfortunate in so far as the parties may be required to litigate similar issues in two places. However, that is the result of the operation of section 11 of the Carriage of Goods by Sea Act and the insistence by WBC on invoking the provisions of section 7 of the International Arbitration Act.
Prime facie, Hi-Fert, having properly commenced proceedings in this Court, is entitled to prosecute the proceedings against WBC and KMC in this Court - Oceanic Sun Line Special Shipping Co. Inc. v Fay (1988) 165 CLR 197 at 239. If the appellants succeed in the proceedings, there may be no need to pursue the Contractual Claims against WBC by arbitration in London. If the appellants fail, however, those claims can then be pursued in London. Accordingly, I consider that the appropriate course would be to impose a condition on the stay of the Contractual Claims that the reference to arbitration in respect of the Contractual Claims not proceed until after the final determination of the proceedings in the Federal Court." (Emphasis added.)
That distinction was further acknowledge by Deane and Gaudron JJ in their joint judgment in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, when they said, at 351 - 352:
"By requiring that the proceedings or so much of the proceedings as involves the determination of a matter capable of settlement by arbitration be stayed, s7(2) clearly contemplates that the proceedings may encompass issues additional to those constituting 'a matter ... capable of settlement by arbitration'. See Flakt Aust v Wilkins & Davies Const (1979) 2 NSWLR 243; Allergan Pharmaceuticals Inc v Bausch & Lomb Inc (1985) 7 ATPR 40-636. 14.
The word 'matter' is not defined in the Act. In the quite different context of Ch III of the Constitution, it has been held that the word 'matter' means 'the whole matter' and encompasses 'all claims made within the scope of the controversy': Fencott v Muller (1983) 152 CLR 570, at p 603. See also Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, at p 475. However, in any context, 'matter' is a word of wide import. In the context of 27(2), the expression 'matter ... capable of settlement by arbitration' may, but does not necessarily, mean the whole matter in controversy in the court proceedings. So too, it may, but does not necessarily encompass all the claims within the scope of the controversy in the court proceedings. Even so, the expression 'matter ... capable of settlement by arbitration' indicates something more than a mere issue which might fall for decision in the court proceedings or might fall for decision in arbitral proceedings if they were instituted. See Flakt, at p 250. It requires that there be some subject matter, some right or liability in controversy which, if not co-extensive with the subject matter in controversy in the court proceedings, is at least susceptible of settlement as a discrete controversy. The words 'capable of settlement by arbitration' indicate that the controversy must be one falling within the scope of the arbitration agreement and, perhaps, one relating to rights which are not required to be determined exclusively by the exercise of judicial power. See Mustill and Boyd, The Law and Practice of Commercial Arbitration in England, 2nd ed (1989), pp 149-150, where it is noted that 'English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not' but that the powers of an arbitrator 'are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state'."
In Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd (1979) 25 ALR 605, McLelland J, at 613 was of the opinion that:
"… the word 'matter' in s 7(2)(b) denotes any claim for relief of a kind proper for determination in a court. It does not include every issue which would or might arise for decision in the course of the determination of such a claim. The use of the word 'settlement' provides support for the view. 'Settlement' is an apt term to be used in relation to a claim for relief ¾ it is less apt in relation to a mere issue."
Flakt was followed in Elders CED Ltd v Dravo Corporation (1984) 59 ALR 206 by Foster J, who, notwithstanding his belief, stated at 210:
"… that the very matters sought to be determined by this summons will be raised during the course of the arbitration and may very well find themselves back in this court by way of stated case"
referred some of the matters raised to arbitration. (See also Mitchell Cotts Freight (Australia) Pty Ltd v Through Transit Mutual Insurance Association Ltd (1989) 98 FLR 99 at 117.)
The ultimate issue is the return of the licence or permit to Benaris. The term "subject matter", as used by Deane and Gaudron JJ in Tanning Research Laboratories Inc v O'Brien (supra), was considered by Merkel J in Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (supra) in the following terms at pars18 - 19:
"While Deane and Gaudron JJ may have differed in some respects from the majority on the question of the scope of a 'matter', Tanning Research is authority for the view that, for the purposes of s 7(2), the 'matter' to be determined in a proceeding is to be ascertained by reference to the subject matter of the dispute in the proceeding and the substantive, although not necessarily the ultimate, questions for determination in the proceeding. The scope of the matter is to be ascertained from the pleadings and from the underlying subject matter upon which the pleadings, including the defence, are based: Tanning Research at 343-344 and 351-354 cf Fencott v Muller (1983) 152 CLR 570 at 608, Hooper v Kirella (1999) 167 ALR 358 at 368-371.
The manner in which a claim or a defence is pleaded is of importance to, but is not determinative of, the characterisation of the 'matter' for the purpose of s 7(2). Once the 'matter' is properly characterised the question to be determined is whether that matter is capable of settlement under the arbitration clause."
His Honour further considered that events and dealings occurring after the formation of the contract might not be matters referable to an arbitral tribunal. His remarks, at par64:
"The post contractual representations stand on a different footing. To the extent that those representations do not rely upon or flow from the contractual relationship they are capable of standing as independent and severable claims that do not arise "under" the sale agreement. However, at this stage, the post contractual claims have not been sufficiently articulated to enable me to determine that they are truly independent of and severable from the contractual claims relating to the performance or suitability of the unit. As they presently stand, the claims appear to be ancillary to, and flow from, the claims the subject of the stay under s 7(2)."
are apposite to these proceedings. Merkel J characterised the separate issues as primary and ancillary, stating, at par69:
"… 'contractual claims' (which are to be stayed under s 7(2)) appear to be the primary and substantial claims, and the other claims the ancillary and less significant claims. It is also likely that the outcome of the contractual claims will be determinative of many of the issues arising between the parties. Furthermore, if Unimould succeeds on the contractual claims it is unlikely that the other claims would proceed and if they did, their outcome is likely to be significantly affected by the determination of the contractual claims."
He concluded, at par70:
"In all the circumstances the significant legal and factual overlap between the contractual and the non-contractual claims makes it desirable that the primary and substantial contractual claims be determined first. That will avoid the undesirable outcome of having overlapping claims adjudicated upon by different tribunals at the same time with the risk of inconsistent decisions: see Hi-Fert at 167-168."
That approach is the one attempted here.
The following matters can be identified by reference to the pleadings and a list of matters or questions identified by Benaris as being "capable of settlement by arbitration".
| issues | statement of claim | ||
| 1.1 Identification of parties, factual material and general background. | Paragraphs 1, 2, 3, 7, 14 | ||
| 1.2 Did Origin Energy Resources Limited ("Origin") by (a) 15 June 2001 (b) 11 December 2001 fully perform and discharge its obligations under cl 4.1.2 of the Farmin Agreement dated 6 July 1999 between Boral Energy Resources Limited ("Origin") and Benaris International NV ("Benaris")? | Paragraphs 4, 5, 6, 8, 16 | ||
| 1.3 If either part of question 1 is answered no, did Origin in the circumstances commit a material breach of cl 4.1.2 of that Farmin Agreement within cl 7A(1) thereof? | Paragraphs 10, 11, 12 | ||
| 1.4 If question 2 is answered yes, was Benaris entitled on 11 December 2001 to give notice of material breach to Origin in respect of that material breach? | Paragraph 17 | ||
| 1.5 If question 3 is answered yes, was the notice dated 11 December 2001 sent to Origin under cover of a letter of that date from Deacons as solicitors for Benaris a valid notice of material breach for the purposes of cl 7A of that Farmin Agreement? | Paragraphs 17, 18 | ||
| 1.6 If question 4 is answered yes, was that breach remedied by Origin (a) within two weeks of that notice; (b) at any other time? | Paragraphs 19(1)(b) and (d) (by implication), 18(3). | ||
| 1.7 If question 5(a) is answered no, was Benaris (in the absence of an injunction restraining it from doing so) then entitled to terminate that Farmin Agreement? | Paragraph 19 | ||
| 1.8 If question 6 is answered yes, was Origin in the circumstances entitled to be relieved in equity against having to re-assign or re-transfer, under cl 2.5 of that Farmin Agreement, the Assigned Interest in Commonwealth exploration permit T/30P issued under the Petroleum (Submerged Lands) Act 1967 and, if so, upon what, if any, terms and conditions. | Paragraph 20 | ||
| issues | statement of claim | ||
| 1.9 If question 5(b) is answered yes, what rights, if any, does Benaris have against Origin by virtue of Origin's having remedied the material breach referred to in the notice dated 11 December 2001 beyond but not within two weeks of that notice? | Paragraph 20 | ||
| 1.10 If either question 3 or question 4 is answered no, what obligations of Origin under cl 4.1 of that Farmin Agreement have not yet been fully performed and discharged by Origin? | General | ||
The following matters can be identified as not being encompassed by Benaris' formulation of issues but which are raised by the pleadings:
| issues | statement of claim | |
| 2.1 Effect, if any, of the Woodside Farmin Agreement and Assumption Agreement on the rights and obligations of Origin and Woodside. | Paragraph 8 | |
| 2.2 Effect of Power of Attorney on Benaris' capacity to require the re-assumption of the whole of the interest in the licence. | Paragraphs 8(a) and (b), 9 | |
| 2.3 Effect, if any, of acquiescence and/or variation by reason of dealings with Origin and Woodside. | Paragraphs 13, 14 | |
| 2.4 If the notice is valid in form, was Benaris for reasons other than those in accordance with its contractual rights, entitled to terminate the Farmin Agreement. | Paragraph 19 | |
| 2.5 Whether Benaris' entitlement under the Farmin Agreement, cls 2.5 and 7A, constitute a penalty: 2.5.1 at law as provided by in the contract; 2.5.2 by reason of equitable principles arising from unconscionability and/or proportionality. | Paragraph 19 | |
The following remedies sought can be identified from the pleadings which require consideration of issues arising both from the contractual rights and obligations and equities claimed by Origin, either directly or through Woodside.
issues | statement of claim |
| 3 Injunction preventing: | |
| 3.1 Termination of Farmin Agreement | A(1) |
| 3.2 Exercise of power to require re-assignment of the 80% undivided interest in the Permit | A(2) |
| 4 Declarations | |
| 4.1 Validity of notice | B1 |
| 4.2 Entitlement to relief from forfeiture | B2 |
| 4.3 Unenforceability of forfeiture because of penalty: 4.3.1 under the contract; 4.3.2 by reason of equity. | B3 |
The following matters can be identified as being "capable of settlement by arbitration", 1.1 to 1.6, 1.10, 2.5.1, 4.3.1.
The following matters can be identified as being, in part, "capable of settlement by arbitration", 1.7 and 1.9, 2.1 to 2.2, insofar as they can be resolved by reference to the contractual rights and obligations of Origin and Benaris.
The following matters can be identified as not being capable of settlement by arbitration, either:
· in part - 1.7 and 1.9, 2.1 to 2.2.
· in entirety - 1.8, 2.3, 2.4, 2.5.2, 3 and 4.
The terms of the principal and subsidiary agreements made between Origin and Benaris, performance, international practice, technical issues such as data, testing requirements, adequacy, and the determination of contractual rights and obligations, are matters which are the province of the arbtiral tribunal.
The effect of these determinations by reason of merger, res judicata and/or issue estoppel, the pure equities of Origin (direct or indirect) and Woodside remain the province of this Court.
The reasoning process adopted in relation to the issue of penalty (2.5.1, 3.5.2), illustrates the complexity of this reference. There is no reason why the arbitral tribunal ought not determine both the legal and equitable status of the claims. Privity, at one level, precludes Woodside from the right to contest the issue, yet since the equitable question is one of law and affects Woodside's interest in the licence, it is entitled as a party to these proceedings to be heard on the matter before a final determination is made. A finding by the arbitral tribunal might be binding as against Origin by merger, estoppel or res judicata but, as a matter of procedural fairness, Woodside is entitled to be heard on the issue. Benaris claims that Woodside has chosen, by its own contractual dealings to "stand or fall" by Origin's interests, and could suggest that the reasoning outlined above is either sophist in nature or an "artificial construct". But Benaris likewise had choices. It knew of Woodside's involvement and had some contractual relationship with it. It chose not to provide an extended arbitration provision which would have permitted an arbitral tribunal to determine the totality of disputation. The Assumption Agreement might well bind Woodside to the fate of Origin but, at this stage of these proceedings, such is impossible to determine. Since the outcome of the penalty issue (a component of the forfeiture issue) impacts on Woodside, it is entitled to be heard on both the final issue (forfeiture) and a component (status of the clauses) which is a pre-condition to that final issue. The "artificial construct" if such be the case, is not of the Court's making.
The order involves by necessity a two phase process. That process has been recognised in the United Kingdom where it is internal to the arbitration itself. (Beaufort Developments (supra) overruling Northern Regional Health Authority v Derek Couch Construction Co Ltd [1984] QC 614; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (supra).) There is no reason why it cannot be applied as between a tribunal and a court, referring identified matters for arbitration. Whether the award made by the arbitral tribunal is regarded as a final or intermediary determination and be capable of merger, will depend on its terms. Final judgment in this Court will depend on whether further evidence is called and, if so, the import of that evidence. Final injunctive or declaratory relief will, in all probability, be a synthesis of the arbitral award and the continued proceedings.
Pending application
In the pending application for summary judgment in action 167/2002, counsel for Woodside foreshadowed an argument that this Court has power afforded by the Act, s7(2), to grant referral to arbitration, subject to the condition that the referral ought be deferred until the resolution of the separate action. Absent success in that application, the use of the power to impose conditions to stay these proceeding would render the whole of action 1144/2001 ineffective. An order has been made staying these proceedings and referring matters to arbitration. A stay on the reference would bring the whole of the action to an end. That course would deprive Benaris of its statutory right to have a complex and technical case referred to a specialist tribunal. The application for summary judgment will be listed for hearing as soon as possible after the time for the lodging of the additional affidavit material has elapsed.
Orders
The orders to be made, subject to the determination of the application for summary judgment, are:
(1)Matters to be referred to arbitration:
(a) in full (as identified in the reasons for judgment), 1.1 to 1.6, 1.10, 2.5.1, 4.3.1;
(b) in part, 1.7 and 1.9, 2.1 to 2.2.
(2)Matters not referred to arbitration:
(a) in full, 1.8, 2.3 to 2.4, 2.5.2, 3 and 4;
(b) in part, 1.7 and 1.9, 2.1 to 2.2
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